Page 633 - Encyclopedia of Business and Finance

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Product Mix

ager (sometimes called a product manager). Decisions
Hypothetical small college product mix regarding the marketing mix for a brand are represented in
the product’s marketing plan. The plan for a new brand
NARROW WIDTH, LARGE DEPTH
would specify price level, advertising expenditures for the
Mathematics Physics coming year, coupons, trade discounts, distribution facil-
Geometric Concepts Intermediate Physics ities, and a five-year statement of projected sales and earn-
ings. The plan for an existing product would focus on any
Analytic Geometry Advanced Physics
and Calculus changes in the marketing strategy. Some of these changes
might include the product’s target market, advertising and
Calculus II Topics on Physics
and Astronomy promotional expenditures, product characteristics, price
level, and recommended distribution strategy.
Calculus III Thermodynamics
Numerical Analysis Condensed Matter Physics II
GENERAL MANAGEMENT
Differential Equations Electromagnetic Theory WORKFLOW
Top management formulates corporate objectives that
Matrix Theory Quantum Mechanics II
become the basis for planning the product line. Product-
line managers formulate objectives for their line to guide
brand managers in developing the marketing mix for indi-
Table 2 vidual brands. Brand strategies are then formulated and
incorporated into the product-line plan, which is in turn
incorporated into the corporate plan. The corporate plan
Product-mix decisions are concerned with the combi- details changes in the firm’s product lines and specifies
nation of product lines offered by the company. Manage- strategies for growth. Once plans have been formulated,
ment of the companies’ product mix is the responsibility financial allocations flow from top management to prod-
of top management. Some basic product-mix decisions uct line and then to brand management for implementa-
include: (1) reviewing the mix of existing product lines; tion. Implementation of the plan requires tracking
(2) adding new lines to and deleting existing lines from performance and providing data from brand to product
the product mix; (3) determining the relative emphasis on line to top management for evaluation and control. Eval-
new versus existing product lines in the mix; (4) determin- uation of the current plan then becomes the first step in
ing the appropriate emphasis on internal development the next planning cycle, since it provides a basis for exam-
versus external acquisition in the product mix; (5) gaug- ining the company’s current offerings and recommending
ing the effects of adding or deleting a product line in rela- modifications as a result of past performance.
tionship to other lines in the product mix; and (6)
forecasting the effects of future external change on the
PRODUCT-MIX ANALYSIS
company’s product mix.
Because top management is ultimately responsible for the
Product-line decisions are concerned with the combi-
product mix and the resulting profits or losses, they often
nation of individual products offered within a given line.
analyze the company product mix. The first assessment
The product-line manager supervises several product involves the area of opportunity in a particular industry or
managers who are responsible for individual products in market. Opportunity is generally defined in terms of cur-
the line. Decisions about a product line are usually incor- rent industry growth or potential attractiveness as an
porated into a marketing plan at the divisional level. Such investment. The second criterion is the company’s ability
a plan specifies changes in the product lines and alloca- to exploit opportunity, which is based on its current or
tions to products in each line. Generally, product-line potential position in the industry. The company’s position
managers have the following responsibilities: (1) consider- can be measured in terms of market share if it is currently
ing expansion of a given product line; (2) considering can-
in the market, or in terms of its resources if it is consider-
didates for deletion from the product line; (3) evaluating ing entering the market. These two factors—opportunity
the effects of product additions and deletions on the prof- and the company’s ability to exploit it—provide four dif-
itability of other items in the line; and (4) allocating ferent options for a company to follow.
resources to individual products in the line on the basis of
marketing strategies recommended by product managers. 1. High opportunity and ability to exploit it result in
Decisions at the first level of product management the firm’s introducing new products or expanding
involve the marketing mix for an individual brand/prod- markets for existing products to ensure future
uct. These decisions are the responsibility of a brand man- growth.

610 ENCYCLOPEDIA OF BUSINESS AND FINANCE, SECOND EDITION